This episode was recorded at Nacha’s Smarter, Faster, Payments 2019 event. Now on this episode, I have Mickey Goldwasser who’s the VP at Payrailz. During our conversation, we are going to be talking about how AI is and is going to be enhancing the customer experience.
Ryan
So if you could tell me what are the most important recent developments in artificial intelligence, as it applies to payments?
Mickey
It’s kind of interesting I think we’ve had a convergence of where technology now comes to practicality. So what’s the whole notion of AI or artificial intelligence or machine learning? And again, when you hear AI you hear all these different things so when I refer to AI it’s not Terminator taking over the world, robots replacing us. AI can be used as “how do I take an experience and make it better.” And you know there’s an old saying in marketing and I’m a marketing guy that, “we don’t mind being offered things as long as they’re timely and relevant.” But what we’re really saying is, look, we’re on information overload, we’ve got all these things going on. So if you’re going to reach out to me, if you’re going to contact me, it really needs to be engaging. It’s got to be proactive and it’s got to be meaningful. So AI, and what fuels AI– in this case is a bank or credit union’s data– AI can be used to make that experience all that much better. So what you’re seeing now is AI has grown to a point where now it can be adapted to be used in Fintech to again make that customer or client experience better.
Ryan
Yeah, no, certainly I mean, I do see the marketing space as well, too. Perfectly spot on, I think marketing, obviously, when it first came out, it was just that kind of that buckshot approach and kind of the feedback you got in and it was humans kind of looking for like okay well what are the common traits that we can find in here. But now with AI, it’s kind of okay that the machine is going to find traits that you as a human may not even have thought of, but does create that better experience overall for the end consumer, which is certainly something amazing and to your point with in terms of the whole Terminator aspect of it, you know certainly there’s like in one particular instance, Boston Dynamics you see a lot of their videos come out with the robots and things like that, but a lot of people I don’t think I understand that, with that part of artificial intelligence the iterations that it takes for them to even show you that portion of it they think oh my word. You know, the T-2020 or whatever it is the model of the Terminator is going to be out in the next five years, but that’s not necessarily the case. So now to kind of get back to the topic at hand here. Taking a look at artificial intelligence, you know, how is it that you see the FI is have responded to this and how have they really embraced this technology?
Mickey
They’re looking at it more now. I mean because to them it’s really new. Right, and they’re wondering like… Do I or should I be an early adopter? Should I be a fast follower? So, I think what’s really happened, I would say, within the last year is realizing that AI is out there and now they’re starting to ask the question how can I take advantage of AI? Again, to me it’s all about giving a better customer/member experience. So how can I do that, because again, beyond the branch since most of us aren’t going to the branches… How do I communicate with my customer, and it’s usually outside of the branches. So AI is something that they’re looking at to say is this something that we can use to better be in contact with our customers or members.
Ryan
Excellent. Now, when we talk about benefits, right, artificial intelligence definitely has many benefits but what are you seeing and hearing in terms of the benefits for the financial institutions and then also, ultimately, the biggest benefit is to the consumer?
Mickey
Absolutely. So, you know at Payrailz we’re dealing and the notion of moving money and making payments, where we see AI is a benefit is that if it will learn my behavior. Now I can take what is usually been a very descriptive process, you have a bill, then you can add in this whole notion of predictive, you’ve got a bill it’s due on the 15th. What AI could start to do, is be prescriptive. “Hey, I can say if you’ve got a bill it’s due on this date, we know about it, you’re giving us permission. Do you want us to go ahead and automatically set that up to pay it for you? And by the way when that’s done we’ll let you know.” So as a society, if I can go off on a little bit of a tangent, we’re so busy, right? We just want tech to do it for me. Right. We just want “do it for me.” And so I can kind of deliver on that promise of doing things for you. We do it every day right? So at my home, down in the in my work office where I have a Roomba vacuum, it’s just going back and forth, right, it’s doing something I don’t want to do, right? So, when it comes to bills, I don’t think people go home on a Friday say “oh my god I can hardly wait to pay my bills!” right? So with things like AI, if you can offer it like almost like a personal assistant, where it’s, again at all this, you’re using the consumer’s permission, you’re asking them, do you want us to do this for you, and basically then saying relax, we’re going to take care of it and then we’ll notify you rather than you having to sit down. And you know, so this is where, you know, it’s not technology for technology’s sake it’s technology because it really fills a business need and the business need is we’re really busy, and we value. If something can be done for us, that’s one less worry for us, and if so if you can simplify my life, and you’re adding value and the added benefit is I walk away saying my bank is doing that for me or my credit unions doing for me, there’s a benefit in that. Right?
Ryan
No, I think it’s especially important that you brought up kind of the confirmation that this is happening here and I think that’s one of the points of that will speed up the adoption with AI because you know as you pointed out, you have the room at your house where you can verify that it didn’t stop because the carpet’s clean on that aspect. So it’s like, it’s that additional verification of saying, “okay, I’m going to trust you to do this but I still need to know it actually did happen,” not just okay kind of gets put in a black box here and then what happens from it here so now kind of taking a look forward, what do you think that the industry can see next in terms of payments?
Mickey
I think what the industry will see…–first of all banks and credit unions have just absolute gold or what fuels AI is data. They’ve got a ton of data, and that data is beyond numbers, it’s behavioral, you know, and you can predict, and you can see that this particular consumer makes these four or five payments a month. You’ve got that? right. You can predict. Oh, they do these payments on a particular day. So what can you do with things like data? So let’s say that it’s normally paying on the 15th. Right? And now it’s like the 18th why don’t I send an alert to the customer and say, you usually do this, did you miss something? And so those are the types of things that can come out of that because you’ve learned my behavior, it’s very personalized, right? And we can do things, like, you know sending alerts back and forth where you’re just, you’re again, you’re going through your bank or credit union do this and you’re getting your bank or credit union reminding you, “hey, do you usually make a payment by now?” “Or hey you’ve got payments coming due and we know you get paid on the 16th, you want to go ahead and just let us take care of that for you?” So that’s where I see payments evolving is where AI can do is make that process even easier. Everybody talks about friction and the minute you hit it you’re gone. So, what a great example of how can you make something frictionless right you get an alert you look at it, you go yeah take care of that take care of that for me. And then I know I’m going to get the confirmation. That’s a great experience.
Ryan
I completely agree with you there and, and I’m glad really glad that you brought up in terms of the friction point, because it’s kind of from a consumer’s perspective what it really is about, okay, I just want to know that this is being taken care of what happens behind the scenes that at that point that, that’s my biggest concern, you know that it’s my banks or credit union’s concern.
Mickey
You’re like they’re gonna trust my bank or my credit union, and I know they’re going to take care of it for me. Now, with the reality of payments has been a lot more people have been going direct. What I mean by that and let’s acknowledge that 800 pound gorilla in the room, right? Why are they going direct? Well, here’s why. Because I get, I get an email or an alert from AT&T where I have my mobile, it says “your mobile is due do want to pay it?” I go, right, boom, it’s pretty easy. What I lose, is you know it’s really hard to manage what you can’t see. So the advantage I think a bank or credit union has is what if I can manage it all in one place. So instead of, you know, four or five, you know okay I gotta get direct from my cable, direct from my mobile, direct for my electric… if I could do that all from my bank or credit union, I get the added value of being able to see it all.
Ryan
Now for the last question here, you know, really, why should financial institutions be looking at smarter payments in the first place?
Mickey
I think we have to go beyond thinking about transactions, right, we have to see that it’s not just a transaction right, we have to start thinking about what motivates me as a consumer, what motivates me? So to me it’s, don’t be shaped by what’s going on, shape what’s going on. And so that’s that you can use this data to provide a better experience for your customers, one that they will use, one that they will value. And so it’s kind of, you know, banks were always the center of commerce, it’s always been the case, always. And what happened is there wasn’t a lot of innovation, so innovation occurred from outside. So technology like AI and machine learning, that’s here to help banks and credit unions, you know get back in the game, if you will. You know, go ahead and be more competitive, you know, and not, I keep going back: don’t be shaped. This is a quote I’ve seen, you know, don’t be shaped, be the shaper, you know, don’t be, and again, I get that people will make mistakes that the leading edge, I mean bleeding edge, but they could be leading edge, and you know folks that say they’re fast followers, I think it’s time and there’s an opportunity to take that initiative and go lead again. That to me is very important, is just don’t sit back. I saw a great stat the other day, let’s use Venmo, great company and everything they look at what they’re doing for payments: it’s simplified, it’s frictionless, it’s all these things. But here’s the shocking part: I saw the stat $2.2 billion dollars, sitting in Venmo accounts, just sitting there. But, so what does that mean? That $2.2 billion isn’t sitting in a bank account, and it’s not sitting in a credit union account. And where did the money originate? It originated from a banking or credit union account. You know, I instructed Venmo to take money out of my account at XYZ institution and send it to you, Ryan, now you’ve gotten the money. And now it’s in your Venmo account. Venmo hasn’t said to you okay Ryan, now let’s go put it in your bank or credit union account, and vice versa. You send me money, and it sits in Venmo. So where’s the value? The part, so the bank and the credit union still have to maintain the accounts that they originated from, all the regulation that goes around it, so you can see the conundrum there. And so, if there was a, you know, so banks can’t just sit back and sit back and go, “this is happening now, Venmo’s here to stay.” And I’m not saying, you know, that it’s not a great service and things like that, but banks and credit unions just need to get more in the game.